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Money Laundering at Phillips Auction?

Christian dives into a rumor that a recent Phillips Auction was actually an affront for some money laundering.

July 08, 2020

The Phillips “Geneva Eleven” auction took place recently, and was a serious event in the watch world. For the first time in the industry, every commissioned watch was sold, to a collective total of $31.7 Million. The first category of piece offered is the “Exceptional Watches,” the sort of cream of the crop of rare and historically significant timepieces. One such watch, Lot 38 – the Patek Philipe 1518 in Rose Gold – was Patek’s first serially produced perpetual calendar chronograph, making it one of the most important in the brand’s history. The watch sold for $3.6 Million, a dramatic increase from the watch’s value just five years ago. Some early FP Journe models, as well, sold for impressive numbers. Numbers so impressive, in fact, that it started to feel like something wasn’t quite right.

The assumption, then, on the part of many observers were that the impressive rates at which these watches were selling, combined with the fact that all of the pieces commissioned sold for the first time ever, must have meant something nefarious was going on. Of course, there is another, more likely explanation for this – the market for these kinds of rare and historically significant timepieces is simply maturing, and is in the process of heating up.

The secondary concern, however, is that the second category of watches, those more broadly available on the secondary market already, were still selling for those kinds of prices. And the answer is also relatively simple: sometimes, buyers will pay a premium to buy a watch from a trusted source. Or sometimes, a buyer gets caught up in the adrenaline rush of the auction and overbids. And sometimes it just happens. But none of those explanations quite hit the level of criminality that some are accusing.

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